Many companies adopt a “customer first, better to have the inventory and not need it” approach to inventory planning. While well intentioned, this approach often ignores the role that diminishing returns and opportunity costs play in inventory management impacting the organizations ability to quickly respond to demand.

In a previous post, I discussed one of the thornier problems demand planners sometimes face: working with product demand data characterized by what statisticians call skewness—a situation that can necessitate costly inventory investments. This sort of problematic data is found in several different scenarios. In at least one, the combination of intermittent demand and very effective sales promotions, the problem lends itself to an effective solution.

Demand planners have to cope with multiple problems to get their job done. One is the Irritation of Intermittency. The “now you see it, now you don’t” character of intermittent demand, with its heavy mix of zero values, forces the use of advanced statistical methods, such as Smart Software’s patented Markov Bootstrap algorithm. But even within the dark realm of intermittent demand, there are degrees of difficulty: planners must further cope with the potentially costly Scourge of Skewness.

NKK Switches, based in Scottsdale, Arizona, is a leading manufacturer and supplier of electromechanical switches. The business involves many different switch types—toggles, push-button, rotary, even some programmable switch types. We are known for our high quality, and for our ability to meet an exceptionally broad range of customer requirements on a turnkey (custom configuration) basis. NKK Switches produces customized solutions from component parts sourced exclusively from manufacturing facilities in Japan and China.